Intact earnings passed the $2 billion mark in 2021

By Aurélia Morvan | Feb. 15, 2022, 10:45 a.m.

Ninety-three per cent: The magnitude of the increase in Intact Financial Corporation's net income in 2021 compared with 2020. The firm reported net income of $2.1 billion, up $1 billion from $1.1 billion the previous year.

For the fourth quarter of 2021 alone, net income was $701 million (M$). This corresponds to an increase of 85.4 per cent or $323 million from $378 million in Q4 2020.

Combined ratio

Intact reported an operating combined ratio of 88.8 per cent for the full year 2021. This ratio improved by 0.3 points over the 2020 combined ratio of 89.1 per cent.

Looking at the results in closer detail:

In Canada, the combined ratio improved by 1.3 points in 2021 to 86.7 per cent
In the United States, the combined ratio improved by 2 points in 2021, to 92.9 per cent.

In the fourth quarter of 2021 alone, Intact’s combined ratio deteriorated by 2.2 points. It was 87.8 per cent, up from 85.6 per cent in Q4 2020. It “included $186 million (3.8 points) of catastrophe losses, which exceeded expectations,” Intact says.

Looking at the results in closer detail:

In Canada, the combined ratio worsened by 0.4 points in Q4 2021 to 84.4 per cent;
In the US, the combined ratio edged upward by 0.5 percentage points in the fourth quarter of 2021 to 92.5 percent.

Operating income

Intact's net operating income also surpassed $2 billion in 2021. It was $2.1 billion, up from $1.5 billion in 2020. The increase was 40.7 per cent, or $599 million.

For the fourth quarter of 2021 alone, Intact's net operating income was $679 million, versus $467 million in Q4 2020. The increase was 45.4 per cent, or $212 million.

Net underwriting income

Net underwriting income reached $1.8 billion in 2021, up from $1.2 billion in 2020. It advanced by 45.5 per cent, or $560 million.

For the fourth quarter of 2021 alone, Intact reported net underwriting income of $600 million, compared with $415 million in Q4 2020. The increase amounts to 44.6 per cent, or $185 million.

Looking at the results in closer detail:

In Canada, net underwriting income reached $1.5 billion in 2021, up from $1.1 billion in 2020. The increase amounts to 32.1 per cent, or $371 million. Net underwriting income was $513 million in Q4 2021 compared with $392 million in Q4 2020, an increase of 30.9 per cent or $121 million.

As for RSA (U.K. and International segment), the acquired company has been included in Intact's results since June 2021. For that month alone, Intact reported net underwriting income of $57 million. For the second and third quarters of 2021, Intact reported net underwriting income of $152 million, with $72 million in Q3 and $80 million in Q4. In total, the integration of RSA boosted Intact’s underwriting income by $209 million in 2021.

In the US, underwriting income reached $117 million in 2021, up from $81 million in 2020. This amounts to an increase of 44.4 per cent, or $36 million. Net underwriting income was $36 million in Q4 2021, versus $35 million in Q4 2020, an increase of 2.9 per cent or $1 million.

In the Other category, Intact reported an underwriting loss of $64 million in 2021, compared to a loss of $8 million in 2020. Operations thus sank deeper in the red by $56 million. Net underwriting income slumped by $17 million in Q4 2021.

Premiums

Across all its businesses, Intact reports direct premiums written of $17.3 billion in 2021, up from $12 billion in 2020. This represents an increase of 43.6 per cent or $5.2 billion.

DPW reached $5 billion in Q4 2021, thus soaring by 74.7 per cent, or $2.1 billion, which “mainly reflected the RSA acquisition, which contributed 69 points of growth,” Intact points out. The insurer adds that “commercial lines organic growth was healthy across all segments.”

In Canada, for the full year 2021, direct premiums written were $12 billion, versus $10.2 billion in 2020. They thus rose by 17.7 per cent, or $1.8 billion.

Specifically, DPW climbed by 12.1 per cent in personal auto insurance, 20 per cent in personal property insurance and 23.2 per cent in commercial lines.

In Q4 2021 alone, DPW increased by 32.9 per cent or $812 million, to reach $3.3 billion.

Specifically, DPW climbed 25.4 per cent in personal auto insurance, “driven by RSA, while we continue to operate in a muted rate environment,” says Intact. DPW in personal property insurance were up 33.4 per cent, “mainly driven by RSA and 5 points of organic growth due to firm market conditions.” Commercial lines DPW increased by 41 per cent, “mainly driven by RSA.”

Investments

Intact’s net investment income also increased. It was $706 million in 2021, up 22.4 per cent or $129 million from $577 million in 2020.

Net income was $220 million in Q4 2021, compared with $143 million in Q4 2020, for an increase of 53.8 per cent or $77 million.

RSA's contribution

“We had a milestone year, successfully closing our largest acquisition to date, and delivering strong results for both the fourth quarter and full year,” Charles Brindamour, Chief Executive Officer, commented during the release of these results.

“The acquisition has clearly enhanced our leadership position in Canada, and we are focused on achieving outperformance in the UK&I. The RSA integration remains on track thanks to our people, who have shown extraordinary commitment in supporting our customers amid a new wave of the COVID-19 pandemic,” he adds.

In its MD&A, Intact states that the company remains “on track to realize at least $250 million of pre-tax annual run-rate synergies (before loss ratio improvements) over the next three years.”